Discrete Probability Distributions Y
Discrete Probability Distributions Y
• µ= ( )+ ( )+ ( )=
Variance and Standard Deviation
• The population variance σ2 represents the average of the squared
deviations (distances of X from the population mean μ, or (X - μ)2. So, the
variance of a random variable X is:
• σ2 = E (X - μ)2 = Σ (X - μ)2 * P(X)
• This formula is not user-friendly, so we can develop a “shortcut” formula
that is easier to use and is algebraically equivalent to it:
• σ2 = Σ X2 * P(X) – μ2 recall: μ = Σ [X * P(X)] so we can also write
σ2 = Σ X2 * P(X) – Σ [X * P(X)]2
• Example: Find the standard deviation for the number of heads
• Recall: µ = 1 so σ =
Example
• A card is selected from an ordinary deck. A casino owner will
pay $10 if you select an ace, $5 if you select a King, a Queen
or a Jack, and $1 if you select a 10. If you select any other
card, you win nothing.
• (a) How much should the gambler expect to win? How much
should the casino charge per game, if they want to “break
even”?
Example continued
• (b) what is the standard deviation of the gambler’s winnings?
• (c) find the probability that the gambler wins at least $10 if he
plays the game twice.
Expected Value problems
• In a lottery, 8000 tickets are sold at $5 each. The prize is a
$18,000 car. If you buy two tickets, what is your expected
gain?
• Solution: Let X = gain ($).
• Build the probability distribution table
X P(X)